Selective Insurance Company of South Carolina v. City of Charleston

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF ILLINOIS URBANA DIVISION

April 13, 2007

SELECTIVE INSURANCE COMPANY OF SOUTH CAROLINA, PLAINTIFF,v.CITY OF CHARLESTON, ILLINOIS, SUED AS CITY OF CHARLESTON; ILLINOIS COUNTIES RISK MANAGEMENT TRUST; AND JOHN PHILPOTT, AS PARTY IN INTEREST, DEFENDANTS.

The opinion of the court was delivered by: Michael P. McCUSKEY Chief U.S. District Judge

ORDER

On March 20, 2007, Magistrate Judge David G. Bernthal filed a Report and Recommendation (#24) in the above cause. On March 30, 2007, Defendant Illinois Counties Risk Management Trust (ICRMT) filed its Objections to Magistrate Judge's Report and Recommendation (#26). This court has carefully considered the reasoning of the Magistrate Judge and ICRMT's Objections. Following this thorough de novo review, this court accepts the reasoning of the Magistrate Judge and adopts his recommendation.

In its Objections, ICRMT stated that it is not contesting Judge Bernthal's determination that this court can decide the "duty to defend" issue by simply comparing the allegations within the underlying complaint with the insurance policies of Plaintiff and ICRMT. However, ICRMT argued that Judge Bernthal should not have recommended denying its Motion to Dismiss (or Stay) in its entirety. ICRMT argued that Judge Bernthal should have recommended denying the Motion as to the duty to defend but should have also recommended granting the Motion to Stay as to the duty to indemnify. ICRMT pointed out that the law is clear that a "declaratory judgment action to determine an insurer's duty to indemnify its insured, brought prior to a determination of the insured's liability is premature since the question to be determined is not then ripe for adjudication." See Travelers Indem. Co. v. Bally Total Fitness Holding Corp., 448 F. Supp. 2d 976, 985 (N.D. Ill. 2006), quoting Maryland Cas. Co. v. Chicago & N.W. Transp. Co., 466 N.E.2d 1091, 1095-96 (Ill. App. Ct. 1984); see also Premcor USA, Inc. v. Am. Home Assurance Co., 400 F.3d 523, 530 (7th Cir. 2005).

This court concludes that an order staying a portion of the litigation is not appropriate at this time. After this court rules on the issue of duty to defend in this case, this court can address the issue of whether a determination on the issue of duty to indemnify would be premature. At that time, this court could dismiss without prejudice or stay the proceedings until the underlying action in the Illinois state court has become final and any liability is determined. See Premcor USA, 400 F.3d at 530.

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